The leaking of media reforms has enraged News Corp and left the impression Turnbull is trying to wedge Abbott.
By Sophie Morris.

Rupert Murdoch’s fresh media war with Malcolm Turnbull

News Corp CEO Rupert Murdoch.

Credit: AP

When Prime Minister Tony Abbott gave Communications Minister Malcolm Turnbull his riding instructions for this year, it included that he report back on options for reforming media ownership laws that are anachronistic in the internet age.

This was one of about a dozen issues that were identified in the updated charter letter that Abbott delivered to Turnbull in late January.

Each minister receives such an epistle from the prime minister, outlining tasks to be accomplished in their portfolio. They are the measures against which a minister can later be judged.

The letters are considered cabinet-in-confidence but The Saturday Paper has confirmed that media reform was included in Turnbull’s brief this year.

This is significant because there is much conjecture over who, if anyone, owns mooted changes to remove restrictions on media ownership and whether there is any political will to progress them.

This week the issue became yet another wedge between Abbott and Turnbull, as leaked details of reform options that Turnbull had presented to Abbott triggered an angry backlash from Rupert Murdoch.

The episode is being viewed by political and media insiders as a microcosm of the undeclared leadership tussle between Abbott and Turnbull.

And with that dig, Murdoch gave extra meaning to what might otherwise have been a relatively routine stoush between industry heavyweights over the shape and purpose of potential media law reform.

Here was the powerful media mogul openly attacking the man who is uniformly assumed to be an undeclared prime ministerial candidate, waiting in the wings for the incumbent to implode.

And there was Turnbull, letting it be known that it was up to Abbott to decide whether to risk the wrath of Murdoch by pursuing his reform proposals.

Turnbull was tossing it to Abbott for a captain’s call. And what a call it would be for a captain who has long been close to News Corp and its proprietor, and continues to favour its media outlets with exclusive stories.

Even representatives of media companies who came to Canberra to lobby for the changes this week acknowledged there was little chance they would proceed. “It’s a victim of the struggle between those two offices and it’s not the only issue that is,” said one, adding that there had been conflicting signals about the fate of the reforms from Turnbull and Abbott.

Turnbull was showing this week that he could achieve outcomes where other ministers had failed. He stepped in to resolve an impasse on the government’s metadata retention legislation, forging a deal with Labor to ensure its passage and avoid the spectacle of eight media chiefs coming to Canberra to complain of its intrusion on journalism.

He handballed the media reforms to Abbott in a letter on Tuesday, March 10, updating him on the industry’s views and the options for reform. The letter sought the prime minister’s guidance on whether Turnbull, as communications minister, should make a formal cabinet submission. It did not outline a time frame for pursuing the changes.

The letter itself was not made public. Yet it has somehow taken on a life of its own, as media executives responded to reports of its contents and Murdoch lashed out at “Turnbull’s plans”. The letter was detailed and technical but, to summarise, it noted broad industry support for the removal of certain ownership restrictions but did not endorse News Corp’s main demand, that pay television companies, such as Foxtel, be able to bid for first rights to broadcast more significant sporting events.

The episode has also spawned conflicting theories about how the contents of a confidential letter became public.

One suggestion has it that the Prime Minister’s Office had the most to gain from the leak, which pitted Turnbull against Murdoch, and that there had been a deliberate bid to damage the communications minister before his proposals had even gone to cabinet. An initial report on The Australian’s website last Friday included anonymous quotes from a “well-placed media industry source” accusing the communications minister of a “massive backflip”.

Another theory, which gained traction as the week progressed, has Turnbull releasing the details in response to criticism from industry players that he had abandoned difficult reform. His ulterior motive, according to this theory, was to shift responsibility to Abbott. In other words, he had dutifully done the work on deregulation options requested by the prime minister. In doing so, he had picked a fight with Murdoch and then handed it over to Abbott to cop the angry phone calls.

The sequence of events last week lends some credence to this. Turnbull sent his letter to Abbott on Tuesday. On Wednesday, March 11, Turnbull delivered a speech at the Brisbane Club. Declaring “the time for spin and slogans is over”, Turnbull lamented the government’s “failure to effectively make the case for budget repair”. He went on to tout his own reformist credentials, saying he had successfully explained the need for changes to the national broadband network and to the pricing of letters by Australia Post.

It was impossible to read this as anything but a deliberate reminder of his suitability to lead the government, as alternative contenders Julie Bishop and Scott Morrison continued to grow in profile and prominence.

The next day, a long-time media industry player decided to take him down a peg. John Hartigan is best known for his years at the helm of News Corp, which he left in 2011 after four decades with the company. Now Harto is chairman of regional TV company Prime Media Group.

He dished it out to Abbott in late February, telling Fairfax Media the prime minister could not turn around his ailing political fortunes and it was time for him to go. “Even his strongest supporters are now detractors,” he said on February 27.

Two weeks later, Hartigan evened things up by taking a swipe at Turnbull, saying his Brisbane speech had been packed with platitudes but his record in his portfolio was “woeful”. “The minister likes to talk the talk when discussing the economy,” Hartigan said. “But when it comes to tackling much-needed media reform in his own portfolio, I wonder if he will walk the walk?”

Perhaps it touched a nerve. Two days later, reports emerged that Turnbull had not been idle.

There may, of course, be an element of truth in both theories of how details of the letter leaked, with different players talking to different media outlets. There is also a third version, which is really a variation on the second: some media executives knew what Turnbull was working on because he talks to them regularly, and this was how news of his proposals emerged.

At any rate, the episode is being viewed by political and media insiders more as a microcosm of the undeclared leadership tussle between Abbott and Turnbull than as an indication of reforms that are likely to ever be enacted, despite a strong push from elements of the industry for change.

In a week in which there were several intriguing leaks of discussions in cabinet and between ministers, it also underscored the disarray and distrust that paralyses a divided government.

Fairfax chairman Roger Corbett, who is also a member of the Reserve Bank board and the Liberal Party, praised Turnbull for “taking up leadership in this matter” and said the apparent tensions in the government were disturbing. “The perception is, for one reason or another, that that team is not working as effectively as it might together,” he told Lateline, “and ... this leak is another example really of that.”

Fairfax stands to gain from changes canvassed by Turnbull, which could allow the cash-strapped company to merge with or be acquired by a television network, such as Channel Nine.

Turnbull’s letter to Abbott noted broad industry consensus for scrapping the “75 per cent audience reach rule” and the “two-out-of-three rule”, which prevent the establishment of a truly national broadcast network and the ownership by one entity of a newspaper, free-to-air television station and radio licence in the same market.

The rationale for these changes is that the rules are outdated in an age when the internet has threatened the viability of traditional outlets and allowed internet streaming services to broadcast nationally online, with no limits on audience reach. Should these changes proceed, it would unleash a round of mega-mergers and acquisitions in the industry, as embattled television networks and print outlets seek scale to remain viable. Turnbull has argued the Australian Competition and Consumer Commission is best equipped to decide whether such deals are anti-competitive.

But it was the third item in Turnbull’s letter that really riled Murdoch. For News Corp, the sine qua non of media reform is changes to the anti-siphoning list, which gives free-to-air channels the first rights to broadcast certain sporting events.

Turnbull has offered three options for the anti-siphoning list, including a reduction in the number of events on the list, particularly where events have previously received only minimal or no coverage on free-to-air television or do not attract large audiences.

But his main argument was that there is an egalitarianism to the current regime, in that it preserves punters’ rights to watch their favourite sport free. It’s a brave politician who meddles with this, especially when it comes to the popular AFL and NRL competitions. Doing so would also take on the combined power of channels Seven, Nine and Ten.

Murdoch’s fury was at the fact Turnbull’s proposals seemed to favour the free-to-air networks by preserving their access to the football and rugby league.

Long-term rhetoric

The communications minister began talking about media reforms just over a year ago, when he launched this newspaper. His speech canvassed the challenges for media companies as advertising revenues dried up. He spoke of how any changes to media ownership laws must consider both the desire for media diversity and the need to ensure there were enough economically viable media businesses to make that diversity possible.

But it was his ad-libbed comments at the Sydney launch that got him in trouble.

“You are not some demented plutocrat pouring more and more money into a loss-making venture that is just going to peddle your opinions,” Turnbull said of The Saturday Paper’s publisher, Morry Schwartz, who also publishes TheMonthly and Quarterly Essay.

Later, Turnbull insisted the plutocrat he was referring to was US newspaper baron William Randolph Hearst, otherwise known as Citizen Kane, professing to be “astonished” that anyone thought he was talking of Murdoch, whom he said was the “most normal” media mogul he knew.

Turnbull has known plenty of media moguls, and not just as a politician. He was Kerry Packer’s lawyer and worked with him and Conrad Black in 1991 on a bid to buy John Fairfax Holdings. Famously, he and Packer threatened to kill each other as the bid disintegrated.

Perhaps it is this familiarity that has kept Turnbull immune from the servile attitude of some government ministers in dealing with Murdoch and News Corp outlets.

In early March 2014, Turnbull convened a summit of media and telco chiefs to discuss the potential for deregulation in the sector. It was clear that, although there was agreement ownership laws were outdated and needed to be looked at, achieving consensus would not be easy.

The different perspectives and rivalries of media companies make it impossible to settle on a package that suits them all. For instance, while the Nine Network has supported the lifting of restrictions to facilitate mergers, Seven West Media favours the status quo as changes could be of greater advantage to its rivals. And the Ten Network has sent mixed signals, sometimes pushing for reform of “last century laws” but this week arguing against a “piecemeal” approach.

From late August through to November, Turnbull held individual consultations with media proprietors and executives. This included meeting News Corp CEO Julian Clarke and the company’s co-chairman, Lachlan Murdoch, at his electorate office in the eastern Sydney suburb of Edgecliff.

After these consultations finished, Turnbull and Abbott had a lengthy meeting in the prime minister’s office in the second last parliamentary sitting week of 2014 to discuss the outcomes. At this meeting, Abbott stressed he preferred a consensus approach. With budget measures stalled in the upper house, Abbott probed Turnbull on the probability of getting any measures through the senate. He asked to be updated in writing on this and the reform options.

Now that update is on his desk. Even if there were willingness in the government to pursue the changes it outlines, their passage would be a struggle without Labor’s support. In government, Labor proposed changes to the “reach rule” but there remains a perception in parts of Caucus that repealing the “two-out-of-three” rule would favour Murdoch, even though Fairfax is pushing most strongly for it.

In a week in which Abbott described the senate as “feral”, it is hard to see him picking yet another fight. And a stoush with that pesky upper house could pale into insignificance compared with a battle with the house of Murdoch.

This article was first published in the print edition of The Saturday Paper on
Mar 21, 2015 as "Murdoch’s fresh war with Turnbull".
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